New Delhi, April 2: State-run Punjab National Bank and Vijaya Bank plan to pick up 30 per cent and 5 per cent equity stake respectively in the proposed joint venture firm with Principal Financial Group, a US-based life insurer.

The New Delhi-based bank plans to transfer its wholly-owned subsidiary, PNB Mutual Fund, to this proposed joint venture.

The new asset management company (AMC) with assets worth around Rs 1,896 crore would be known as PNB Principal Asset Management Company. According to data from The Association of Mutual Funds, PNB Mutual Fund has assets worth Rs 142 crore.

Punjab National Bank also plans to form a joint venture unit with the Principal Group and Vijaya Bank to retail financial products.

“This joint venture would have the same equity holding pattern as the AMC,” officials said. “Principal will hold 65 per cent, PNB 30 per cent and Vijaya Bank 5 per cent equity stake.”

Analyst said the joint venture with Principal would drive the bank’s mutual fund business. “The mutual fund unit of the bank has always lagged behind...it needs a push which Principal with it’s expertise would be able to provide,” an analyst said.

He said the association with Principal would also boost the brand image of the bank’s existing fund schemes.

Earlier, the Principal Group had an equal holding partnership with Industrial Development Bank of India (IDBI) in an asset management firm with an equity base of Rs 10 crore.

However, the ailing domestic financial institution as part of it’s strategy to quit mutual fund business had divested its holding in IDBI Principal Asset Management Company for Rs 94 crore at Rs 188 a share.